WASHINGTON — Next week marks the start of quarterly earnings calls for the biggest defense companies — and there are likely to be plenty of questions in the wake of President Donald Trump’s Jan. 7 executive order targeting firms the White House says are prioritizing stock buybacks and dividends over investments in their production lines.
But which companies have traditionally taken that route, a common tactic for publicly traded firms? Data compiled by the defense consulting firm McAleese and Associates and shared with Breaking Defense helps shed light on the veracity of Trump’s claim for eight defense primes: RTX, Lockheed Martin, Boeing, General Dynamics, Northrop Grumman, BAE Systems, L3Harris and Huntington-Ingalls Industries.
The numbers appear to back up Trump’s complaint: Seven of the defense industry’s heavy hitters generated $21.2 billion in free cash flow — their overall cash flow minus spending on capital improvements — and returned 98 percent of that to investors through dividends and share repurchases, according to McAleese. Boeing, whose 2024 sales were largely comprised of commercial business, was excluded from overall totals because of its “massive … negative free cash flow burn,” McAleese said.
What’s more, the seven companies returned $4.6 billion, or 28 percent, more cash back to their investors than they put toward internal research and development or capital improvements that year.
The analysis uses information from company reports and federal filings for 2024, the latest full year for which data is available; consider it a table setter for how executives may try to maneuver around the president’s demands. Learn more about how the numbers break down by company below.
Dividends
Dividends, the cash that public and private companies shave off of their profits to reward investors, are a common perk of owning stock. How much of that money a stockholder can receive depends on how many shares they own; total dividends paid also depends on how many investors a company has. Trump’s order accuses contractors of paying “excessive dividends” to shareholders rather than using that money to produce weapons faster.
In 2024, RTX issued the most in dividends at $3.2 billion, slightly ahead of Lockheed Martin and at least double that of other firms. Trump has bashed Raytheon, the weapons-building arm of RTX, as the “least responsive to the needs of the Department of War, the slowest in increasing their volume, and the most aggressive spending on their Shareholders rather than the needs and demands of the United States Military.”
Stock buybacks
Spending a company’s money to buy back its own stock is a strategic move that can boost a share’s value by making them harder to get. Higher share value rewards current investors, while reducing the supply makes it more difficult for an outsider to purchase a controlling share in the company. Like dividends, Trump’s EO bars defense contractors from repurchasing stocks “at the expense of accelerated procurement and increased production capacity.”
Most of the firms repurchased less than $1 billion in stock in 2024. Lockheed leads the list at $3.7 billion; RTX, which Trump said will lose Pentagon business unless it stops buying back stock, came in sixth.
HII Chief Executive Officer Chris Kastner doesn’t expect the order will change much for the company, which has already stopped stock buybacks.
“We’ve been investing more. I expect us to grow more, and I expect to be held accountable to meet the commitments I make in my contracts,” Kastner told reporters earlier this month. “When I read the executive order, it felt like, OK, we’re doing the right stuff. We’re going down the right path.”
Internal investments
Trump is urging defense contractors to funnel more of their earnings into more productive factories and innovation. Industry measures that spending in two buckets: internal research and development (IRAD), the money a company puts toward advancing its own ideas before a customer backs them, and capital expenditures (CapEx), money spent on the upkeep and expansion of facilities used to design and manufacture equipment and software.
Most of the primes included in the analysis spent less in those two areas combined than on shareholder-focused moves. However, RTX, General Dynamics, BAE and Boeing each saw growth in both IRAD and CapEx in 2024, data show.
Boeing’s total capital expenditures grew by 46 percent in 2024 as it edged out the others in overall internal investment, according to McAleese, which noted some of that boost may be linked to development of the US Air Force’s next-generation F-47 fighter.
The big picture
Here’s how the data points work together: Free cash flow drives the stock price by determining how much money a company can give back to investors and use to repay debts, according to McAleese. So, the greater the cash flow, the more flexibility a firm has to issue dividends and repurchase shares.
Lockheed’s returns outpaced free cash flow more than at its competitors, and the defense giant returned the most money to shareholders compared to its annual sales and its own investments, data show. Boeing, RTX and HII invested more in themselves than in their shareholders. Boeing was also the lone firm that did not issue dividends or buy back stock as its cash flow sank into the red.
Valerie Insinna contributed to this story.